Deep Industries Limited: Fueling Growth with Stellar Q2 & H1 FY26 Performance

Deep Industries Limited, a prominent player in India's oil and gas field services sector, has reported an exceptional financial performance for the second quarter and first half of fiscal year 2026. The company, known for its comprehensive support services across the post-exploration value chain, showcased robust growth, driven by strategic initiatives and operational efficiencies. For Q2 FY26, the consolidated operating revenue surged by an impressive 69.2% year-on-year to Rs. 221 crore. This strong top-line growth translated into a significant boost in profitability, with net profit after tax (PAT) soaring by 71.4% to Rs. 71.2 crore. The first half of FY26 also maintained this momentum, with consolidated revenue reaching Rs. 420.5 crore, marking a 65.5% YoY increase, and PAT growing by 65.6% to Rs. 132.9 crore. These figures underscore Deep Industries' ability to capitalize on the renewed momentum in India's energy sector.

The company's performance reflects its strategic emphasis on value-added services and expanding its operational footprint. A key highlight was the successful takeover of the Rajahmundry asset under a Production Enhancement Contract (PEC). This 15-year, Rs. 1,402 crore contract with ONGC is designed to boost production from matured fields, with operations commencing in April 2025. Management anticipates this contract alone will contribute Rs. 140-150 crore in revenue annually from the next financial year, with attractive EBITDA margins around 50%. Additionally, Deep Industries secured a Rs. 96.72 crore contract from Oil India Ltd for a 7-year charter hire of a workover rig in Assam and Arunachal Pradesh, further diversifying its presence across key hydrocarbon basins. The company's expertise in modular gas processing systems under the Lease-Operate-Maintain model continues to attract significant interest from PSU clients, highlighting its critical role in enhancing reliability and cost efficiencies in challenging gas fields.

Expanding Horizons: Offshore and Capital Allocation

A significant strategic move for Deep Industries has been its entry into the offshore services market through the acquisition of Dolphin Offshore Enterprises. This expansion leverages the company's extensive experience into deep-sea operations, offering services such as accommodation barges, platform support vessels, and anchor handling tugs. The dynamically positioned DP2 barge, Prabha-DP2, owned by its subsidiary Beluga International DMCC, commenced revenue generation in May 2025. This segment is expected to be a high-margin business, with management projecting Dolphin Offshore to contribute around Rs. 100 crore to the top line in FY26, with over 40% year-on-year growth from the next financial year and impressive EBITDA margins ranging from 60% to 80%. This diversification into offshore services not only strengthens the company's global presence but also opens new avenues for growth and profitability.

To support its ambitious growth plans and maintain a robust financial position, Deep Industries is undertaking a Qualified Institutional Placement (QIP) to raise approximately Rs. 300 crore. These funds are earmarked for expansion, acquisition of new assets, and capital expenditure related to the production enhancement contracts. The company anticipates a total CAPEX of Rs. 600 crore, with Rs. 100 crore already deployed and the balance to be invested in future projects. This disciplined approach to capital allocation, coupled with a focus on maintaining a low-leverage balance sheet, positions Deep Industries for sustainable long-term growth.

Outlook and Strategic Clarity

Deep Industries' management expressed confidence in sustaining the growth trajectory, guiding for a 35% to 38% year-on-year growth in the next financial year. The company's order book, standing strong at over Rs. 3,050 crore as of November 2025, provides significant long-term revenue visibility. While acknowledging a historical dependency on ONGC, which currently accounts for approximately 60% of its revenue, the company has actively diversified its client base over time, reducing this concentration from a previous 75-80%. The focus on value-added services, operational efficiency, and strategic expansions into high-growth segments like offshore services and production enhancement contracts underscores the company's strategic clarity. Deep Industries Limited is not just delivering strong numbers but is also building a resilient and diversified business model, poised to contribute significantly to India's energy security and create long-term value for its stakeholders.